County saves more than $8 million through bond refunding
March 19, 2021
By County Manager, Chris Coudriet
Saving tax payer money is something that New Hanover County strives to do every day. It’s foundational to our strategy and vision of modeling good governance. We want to make sure we use the public resources entrusted to us wisely, and always ensure we are being good stewards.
The county continuously reviews its outstanding debt compared to the current interest rate environment to determine when we should take advantage of lower interest costs. This lowers our expenses so we are able to minimize taxes and fees for our residents and businesses.
New Hanover County also has a triple-A bond rating from both Moody’s Investor Services and Standard & Poor’s Rating Services (the highest rating a county can achieve financially), so it allows us, as a government entity, to get the best possible interest rates available.
With the historically-low interest rates the nation has experienced recently, our Finance Department took the necessary steps to refund several of our outstanding debt issuances that were issued during a time when interest rates were higher. Through this process, the county was able to obtain a much lower interest rate on outstanding debt and see a total net present value savings of over $8.7 million over the remaining life of the debt.
This is great news and an example of the county’s continued focus on stewardship.
For the financial aficionados among us, I’ve outlined those specific savings below:
- General Obligation Bond Refunding: refunded certain 2010 bonds and certain 2013 bonds that funded capital projects for Cape Fear Community College. The 2010 refunding produced $4,254,271 in net present value savings (14.18% of outstanding bonds refunded) and an average annual savings of $435,000. And the 2013 refunding produced $3,425,237 in net present value savings (11.71% of outstanding bonds refunded) and an average annual savings of $251,000.
- Limited Obligation Bond Refunding: refunded a bank loan that was used to fund the construction of the Pine Valley Library and Ogden Fire Station. The refunding produced $1,083,201 in net present value savings (14.92% of debt that was outstanding) and an average annual savings of $97,000.
The more-than $8 million in savings will be a lasting benefit for years to come, because now that money that was programmed for debt payments can be re-purposed and used in the general fund toward other important purposes to serve our residents and businesses. Effectively, that’s $8 million in revenue we don’t have to raise to meet things our community needs and wants.
This is really great news for our tax payers and our county, and I appreciate the work of our Finance team and the leadership of the Board of Commissioners in making stewardship a priority and a value that the county embraces and acts on.